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Sell At A Loss To Cut Taxes?
Question: Our home is worth more than the mortgage. Should we pay someone to buy our home?
Answer: No. Your problems will just be worse. In areas of the country where prices have declined, homesellers are sometimes offered the "opportunity" to "sell" their homes to an individual or company for a price equal to the mortgage balance. Sellers are expected to pay the buyer, usually one percent of the mortgage amount. The "buyer" then turns around and tries to either sell the property or to work out a short sale with the lender. Since the property is worth less than the mortgage, that avenue is dead. As to working with the lender, the lender has very little incentive to pay a third-party to take a loss on the property. Where does all this leave the owner? The owner paid one percent of the mortgage to the "buyer." The owner no longer has title -- that was assigned to the "buyer." The owner still owes the full mortgage amount to the lender (title changed hands but not the obligation to repay the debt). If monthly payments are not made, the lender will foreclose. If the lender forecloses, the owner's credit will be injured for years. And one more thing. If the lender forecloses, any loan balance not paid by the owner or obtained through a foreclosure will be a loss to the lender. Lenders don't like losses and the loss may be reported to the IRS under certain circumstances as taxable income to the owner. Please carefully read any short sale offers with the assistance of an attorney. Your loan is with the lender, not a third party. If for some reason this idea remains appealing, please call the consumer affairs division of your state attorney general's office to discuss this "opportunity."
Written by Peter G. Miller.
© 1997 Peter G. Miller. All Rights Reserved. Rules, Disclaimers & Notices.
Copyright © 2012 Realty Times. All Rights Reserved.
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